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Judgment
Alfred Henry Ltonel Leach, C.J.—The appellant was the plaintiff in a suit filed in the City Civil Court for the recovery of damages for the
dishonouring of a cheque. The respondent is a bank carrying on business in Mount Road, Madras. In September, 1932, the appellant opened an
account with the bank. The bank had rules regarding the keeping of accounts and one of the rules reads as follows:
The bank reserves to itself the right to close any account without reference to the depositor if in the opinion of the bank it is not desirable to keep
such account for any reason whatsoever.
This was one of the conditions on which the plaintiff''s account was opened and it formed part of the contract between him and the bank with
reference to his account. There was a further rule to the effect that a depositor should always have a minimum credit balance of Rs. 100.
On the 1st August, 1934, when his account was standing in credit to the extent of Rs. 15-4-7, the appellant drew a cheque in favour of one
C.R. Parthasarathi Mudaliar for Rs. 12, but the bank closed the account that day. The cheque was presented for payment on the 3rd August,
when payment was refused on the ground that the account had been closed since the cheque had been drawn, the cheque being returned with an
endorsement on a separate slip bearing the words "" account since closed"". When closing the account on the 1st August, the bank wrote to the
plaintiff informing of the fact and sent him pay warrants for Rs. 15-4-7 and Rs. 3-11-1, the latter sum representing interest which the bank
admitted had accrued due to the plaintiff in respect of his account. This letter was received by the plaintiff on the 3rd August, and on that date he
wrote to the bank stating that he had drawn a cheque for Rs. 12 on the 1st August. He accordingly returned the warrant for Rs. 15-4-7 to meet
this cheque. He kept the warrant for Rs. 3-11-1 against a larger claim for interest. He alleged that the bank was indebted to him for interest in the
sum of Rs. 10 and had in fact already filed a suit to recover this amount. The relations between the parties therefore were not on an amicable basis
when the account was closed by the bank, but this does not affect the question at issue.
The learned Judge found that there was no cause of action and in disposing of the claim observed:
It is argued that such a rule (that is, the rule giving the bank the right to close an account without reference to the depositor) is invalid because it is
opposed to the ordinary code of banking business. But so long as it is not in violation of a statutory obligation I do not see why parties should not
contract themselves in the manner they have chosen to do. The rule is in the nature of a contract entered into between the parties. It cannot be said
that there is a statutory prohibition. Neither can it be said that it is immoral or that it is opposed to public policy. Under the circumstances I am of
opinion that plaintiffs were not entitled to be given notice before the account was closed.
We are in entire agreement with these remarks. The rule is worded without any ambiguity. It gives the bank the right to close the account at any
time without giving the plaintiff notice of the fact. I might add that in returning the cheque the bank was careful to point out that the account had
been closed after the drawing of the cheque. Therefore there was no reflection on the plaintiff not that this would make any difference to the
plaintiff''s position, but it does provide another ground for holding that the plaintiff has brought this action without any justification.
The appeal will be dismissed with costs.